About TLB

Philip Jessup proposed the idea of a transnational law course. His vision of the subject was broad, including public and private international law; state and non-state actors; business, administrative, and political affairs; as well as negotiation and litigation. Inspired by his idea, TLB is only constrained by its pursuit to address all law transcending national frontiers.

June 07, 2009

As the Dong Falls, Vietnam Faces a Harder Test at the Time of Global Crisis

The Financial Times recently reported that the Vietnam's dong is depreciating steadily
as budget deficit and account imbalance grows with "chronic current
account deficit that reached $8.4bn, or 9.3 per cent of gross domestic
product, in 2008". Vietnamese government is facing the threat of not gathering enough
money for its $80bn fiscal stimulus package as bonds and other
commercial tools are falling flat. Investors are holding onto foreign
currency due to the uncertainty of the dongs mostly credits to growing trade
imbalances and insufficient foreign reserves.

This is a predictable test that most
developing countries face at this stage of development, and is what
economists considered as the "original sin," for which domestic currency
is not used for foreign loans and on long term domestic loan contracts.
Reliance on foreign currency for domestic exchange and long term loans
make the country highly vulnerable to exchange shock and speculative
attack which were the major drivers of the 97-98 Asian
financial crisis.
The Vietnamese government has little choice, and each option carries
relative cost. Raising more reserves will temporary slow down growth,
but this must to
be done to boost investor's confidence on domestic market and to
provide a stable macro economic framework for further development.
Vietnamese
government must find the outlet to do this- better now than later.